Does break-even include inflation?

It depends on your inputs. If you set home appreciation and rent growth, those act as inflation proxies.

Break-even Year in Rent vs Buy: What It Means (and What It Doesn’t)

Q: Why is my break-even 'Never'?

If rent is cheap relative to the home price, and investment returns are high, renting might simply be permanently richer. This can happen in cities with extreme price-to-rent ratios.

Break-even Year Explained

The Break-even Year is the exact point in time where the Total Net Worth of the "Buyer" surpasses the Total Net Worth of the "Renter".

Definition and Intuition

Day 1: The Buyer is behind by ~5% (Kosten Koper). The Renter has their full savings in the bank.
Year 1-3: The Buyer pays down mortgage and the home value rises slightly. The Renter pays rent (gone) but earns interest on savings. The gap narrows.
Break-even: The moment the Buyer's home equity (minus selling costs) exceeds the Renter's savings portfolio.

Why Break-even Can Be Misleading

A single year (e.g., "Year 5") doesn't tell the whole story.

Selling Costs: The break-even calculation must assume you sell the house. This triggers paying a broker (makelaar), usually 1.5%. If you stay put, you don't pay this yet.
Step Function: If you have a fixed-rate period ending in Year 10, costs might jump.
Risk: If the break-even is Year 9, and you plan to stay 10 years, that is a risky margin. A small dip in home prices could push the break-even to Year 12, putting you in the red.

What to Check

If your break-even is comfortably short (e.g., <5 years) given a 10-year horizon, Buying is likely safe. If your break-even is close to your horizon (e.g., Year 8 vs 10-year plan), check:

Home Appreciation: Lower it by 1-2%. Does break-even explode?
Selling Costs: Did you include the ~1.5% fee to sell?

Sensitivity Checklist

Scenario	Impact on Break-even
Home Prices Flat (0%)	Pushes break-even out significantly (often 10+ years).
Rent Increases High (5%)	Pulls break-even closer (Rent becomes painful fast).
Stock Market Crash	Pulls break-even closer (Renter loses money).

FAQ

Why is my break-even 'Never'?

If you input a high investment return (e.g. 10%) and a low home appreciation (e.g. 2%), the compound growth of your savings as a renter might outpace the home equity forever. This usually implies renting is the smarter financial choice under those assumptions.

Sources

Last updated: 2026-07-03